Proper Officer Shall Consider Dropping GST Cancellation Proceedings if Pending Returns and Dues Are Cleared: Gauhati HC [Read Order]
The HC held that GST authorities must consider dropping cancellation proceedings and restoring registration in Form REG-20 if the taxpayer files all pending returns and clears all dues
Proper Officer
Proper Officer
In a recent ruling, the Gauhati High Court held that a proper officer shall consider dropping GST cancellation proceedings if a taxpayer furnishes all pending returns and clears outstanding dues, including tax, interest, and late fees.
The case arose from a writ petition filed by Dhirghat Hardware Stores, a proprietorship firm represented by its proprietor Mainur Islam, challenging the order dated 22 March 2023 passed by the Superintendent under Section 29(2)(c) of the Central Goods and Services Tax Act, 2017. The petitioner’s GST registration had been cancelled for failure to file returns for six consecutive months.
The petitioner’s counsel argued that the cancellation order was issued without proper consideration of the proviso to Rule 22(4) of the CGST Rules, 2017. He submitted that the petitioner had already filed all pending returns up to March 2023 and paid the full tax dues with applicable interest and late fees.
The counsel also argued that under Rule 22(4), once the taxpayer furnishes all pending returns and pays the dues, the officer should drop the cancellation proceedings and pass an order in Form GST REG-20 restoring the registration.
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The State’s counsel argued that the registration had been cancelled strictly under Section 29(2)(c) due to continuous non-filing of returns.
They pointed out that the petitioner had failed to respond to the show cause notice within the prescribed time and that the online system prevented revocation after the expiry of the 270-day period. They acknowledged that the petitioner had subsequently cleared all pending dues and returns.
The bench comprising Justice Sanjay Kumar Medhi observed that under Rule 22 of the CGST Rules, a proper officer can cancel registration for non-filing of returns, but the proviso to Rule 22(4) allows such proceedings to be dropped if the taxpayer later complies by filing all pending returns and paying tax, interest, and late fees.
The court explained that cancellation of registration has serious civil consequences, and if the taxpayer satisfies the conditions of compliance, the officer is expected to consider restoration. The court also referred to the decision in Sanjoy Nath v. Union of India (2023), where a similar direction was issued for reconsidering GST registration after compliance.
The court held that if the taxpayer furnishes all pending returns and clears all dues, the proper officer must consider dropping the cancellation proceedings and take steps for restoration by passing an order in Form REG-20.
The court directed the petitioner to approach the concerned officer within two months and directed the authority to process the application for restoration in accordance with law. The writ petition was accordingly disposed of.
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